A Company Manufactures Tractors and Lawnmowers

Essay

A company manufactures tractors and lawnmowers. They have received an order for six deluxe custom riding lawnmowers for a local golf course. They must develop a cost estimate for the order. It is estimated that the first lawnmower will take 90 hours of shop time and a 75 per-cent learning curve is expected. The labor rate is $18.00 per hour, and the pricing policy of the company is to charge 2.5 times the cost of labor for the order.
a. How many hours should the sixth lawnmower take?
b. How many labor-hours should the whole order take?
c. What is the customer's price for the whole order?
d. What is the price per lawnmower?
e. If the original time estimate for the first lawnmower is too low, and it actually takes 80 hours for the third lawnmower, what is the labor hour estimate for the first unit?
f. If it actually really takes 80 hours for the third lawnmower, what is the new total labor cost for the entire order?